Envato and Hey Tiger - business for good

About Envato 

Collis Ta'eed -  co-founder of Unicorn  Envato, -  is stepping down as CEO after announcing a record profit of $18.75m on a turnover of $200m to its 360k paid subscribers and 2m active users. 

Envato is a Melbourne-based digital marketplace to the creative community people buy and sell creative digital goods like music, graphics, video, photos, website themes and basically anything you might need for a creative project.

Envato - bought  Mexican Company PlaceIt in 2018 - a  competitor to Canva in the simplified graphic design market - doubling its workforce from 300-600.

A global search is being undertaken for a CEO to take Envata to the next stage of its journey. There is an abundance of talent from the likes of other content creators such as 99Designs, Airtasker, Canva, Freelancer.com and Redbubble - which have all boomed as housebound hobbies during the COVID-19 pandemic has seen rapid growth in the sector. 

"It's time to let someone else with fresh ideas and energy lead the day-to-day running of the company. I feel comfortable in handing over the keys while the company is in good shape,"  say Collis

It’s Values

Envata has its  company values, based on the core value “when the community succeeds, we succeed.”

Around this , values include 

”not just the bottom line,” 

“tell it like it is” and

 “diverse and inclusive,”

That stems from the reality that there are thousands of talented people all over the world selling with us, and our goal as a business has to be about helping them earn a livelihood doing creative work they love on their own terms. 

Cyan says that she loves that this value is also applied to our community of team members and our broader community.

Envato was recently listed in the top 10 Best Places to Work of Australian workplaces with 100-999 employees.

It’s the sixth consecutive year it has been recognised in the Great Place to Work awards.

'At Envato, we’ve worked hard to cultivate 100 per cent flexible work. For the members of our team who have ongoing mental health differences that make it hard to get to work sometimes, being able to work from home whenever they feel they need to makes a meaningful difference,' said Cyan 

The Story 

Collis 40 and his wife Cyan 39 started selling its first Subscription as a Service with Adobe Flash products 14 years ago from their garage expanding to now selling everything from WordPress templates to 3D printing renders. SAAS is the go!!!

They are  ranked fourth on 2019's Financial Review Young Rich List with the couple's stake in the wholly family-owned business valued at $799 million.

So where to from here? 

Giving

Cyan has developed “Hey Tiger” a chocolate brand that is all about pairing chocolate with unusual flavours, the best ingredients, and incredible design. It’s  100% owned by a charitable trust that funds community development projects with cocoa farming communities in West Africa (where most of the world’s cocoa is grown). Collis will be joining Cyan once the handover to a CEO is complete hopefully by end of 2020.

20% of Envato's operating profit has been shared with staff, who mainly sit in Melbourne or the Mexican city of Guadalajara, with 2% being donated to charity - mainly Homeless charities in Melbourne

The entrepreneurial couple made headlines when it was revealed they generously offered a $13 million profit share to 1000 current and former staff.

This is despite Envato profits almost halved in 2017-18.

'That was a fun email to send. I had former colleagues ringing to check it wasn't a phishing scam,' Mr Ta'eed told AFR In April. 

Succession 

The search for Envato's new boss is global, although Mr Ta'eed noted there was plenty of great talent both within Envato and Australia's online marketplace scene,

Mr Ta'eed will remain chairman of Envato's board, which also includes Cyan, his father Fuad and brother Vahid. 

Additional independent directors could be appointed as part of a renewal process under the new chief executive.

Source 

This article has been sourced from various articles including from 

Michael Bailey of afr - who writes on entrepreneurship  and the arts. He is also responsible for the Financial Review's Rich Lists. Connect with Michael on Twitter. Email Michael at m.bailey@afr.com

Songtradr for Musicians - could be what Redbubble is for photographers and Artists

Paul Wiltshire’s online music platform Songtradr, has closed a $42 million ($US30 million) capital forum 25% of the equity. 

Money raised from  family offices including WiseTech Global boss Richard White and the St Baker family office, which is connected to energy sector businessman Trevor St Baker. 

What will the money be used for

A third of the capital will go towards fuelling organic growth and expanding the product development team. Expanding the office in Belfast, Northern Ireland, and building up a tech team in Australia.

The balance is for strategic acquisitions across complementary technologies that improve processes and acquisitions of boutique music licensing companies who represent major brands or customers.

So who is Paul Wiltshire

Paul Wiltshire started as a songwriter - and together with his wife, Victoria, created a formidable team - who were record producers, working with the likes of Delta Goodrem, Vanessa Amorosi and Guy Sebastian.

Paul identified the opportunity to set up a platform to licence independent artists and moved to LA in 2014, setting up their own music licensing platform - connecting musicians to consumers. 

So what is Songtradr

Songtradr connecting artists, record labels and publishers to licensees from multiple verticals such as advertising, brands, film, TV, gaming, video streaming services and other media.

The idea is to expand artists’ revenues, while ensuring they maintain control of their rights, and are paid fairly.

Paul says that he believes it's the right time for artists who are creators to put their energy into creating and releasing more music. Sngtradr is built on artists seeing their music as a business, activating all of those income streams, being discoverable ... and working their social media and other channels to support that.

One of the cool things that it does is that it uses artificial intelligence to automatically describe a piece of music and match pieces of music with advertisers looking for a song that will appeal to a particular audience.

Songtradr is the only open marketplace for music licensing in the world with scale, and currently has a community of over 500,000 artists, songwriters and catalogues from 190 countries and a quarterly growth rate of more than 30 per cent. 

It has more than 1.3 million songs on the platform, and more than $1.5 million in monthly recurring revenue. 

Since COVID-19 began, the number of new songs released by artists has increased three times since the onset of the pandemic.

Its users include Amazon, Hulu, Netflix, Disney, MTV, Apple, Microsoft, Fox and CBS.

So who is Redbubble 

Today, Australian startup Redbubble - helps Artists and Photographers commercialise their Art - founded by Martin Hosking in Melbourne Redbubble is close to being a unicorn!

The Timing is now to Connect Innovators and Entrepreneurs to Mentors and Money

“Out of every Pandemic or Disaster comes Change.....And from Change comes Opportunity.” Ivan Kaye 

I noted an article written by my friend Jordan Green, founder of the Melbourne Angels, and the 2019 Australian Angel Investor of the Year. https://www.linkedin.com/in/jordangreen

He wrote about  how technology has given us the ability to recognise and respond to the COVID-19 crisis with a speed and scale in an unprecedented way. 

The necessity to innovate and solve pain points that has been created from this Change has created opportunities for entrepreneurs and innovators. They will find the key elements of a new direction, a new way of doing things.

• New business models are being created.
• The environment is a focus
• Purpose and Values are coming to the fore as people have a time to reflect, realign and reimagine 

There has never been a better time to be an entrepreneur and an investor in the VC space  - and timing is everything in the startup world! 

When I first met Jordan 18 years ago - the VC market in Australia was Nascent and we were holding BSI Investor Forums to groups of HNI and Angels - when very few funds existed - The Government invested $130m in the BiTs programme- creating 10 incubators -which helped spark an industry where over $1b from a few funds in the last 3 months! 

At our BBG investor forum last month, Tony Surtees notes that in Australia, VC has been an asset class, where it is not unusual for investors to get a 20-30% return on investment .

The forum was outstanding - where we discussed the opportunities and the “where to from here?” question 

Well worth checking it out!! Here’s the link 

http://bbg2020.blogspot.com/2020/07/bbg-june-super-forum-with-tony-surtees.html?m=0

One of my takeouts from the forum was that market timing is the most critical factor in startup success and failure — meeting the market! 

The Opportunity is Now 

I believe there is an opportunity today - to create a Forum connecting Startups and Entrepreneurs to the plethora of highly skilled and cashed up Baby Boomers - and I look forward to playing a part in connecting these Humans - to collaborate, contribute and learn from each other and take advantage of the Opportunities that are arising from this massive change .

Together We will imagine and build a  better future. 

There will be a plethora of opportunities - Let’s get them to market together.....

Who wants to play? 

The 4 biggest and most active VCs in USA

For those looking to get VC

Accel, Andreesen Horowitz, GV and Sequoia are four of the biggest names on the venture capital landscape. 

In the second quarter of 2020, all four were among the 20 most active venture firms in the US, led by Andreessen Horowitz and its 29 new investments.

Senate looking to make a $1.8B cut to innovation and tech sector

Canva and Atlassian are fighting to save the R&D Tax Incentive as a methodology to promote innovation .

Instead of the proposed changes - to cut incentives for innovation amounting  to an estimated  $1.8 billion, the government should look to several “immediate, interim measures” to stimulate the growth of Australia’s innovation economy, both Atlassian and Canva argued.

The federal government’s planned changes to the research and development tax incentive, is planned to go before a Senate committee to approve the controversial reforms - that could kill innovation incentives for much of  the Technology and Startup Sector and harm Australia’s economic recovery from the COVID-19 recession.

Atlassian’s  Scott Farquhar said the RDTI is “more important than ever” in the wake of COVID-19, and the proposed reforms would damage the scheme for most companies.

Scott  goes on to say that research and development – including software R&D – sits at the core of Australian innovation and is vital to its future in a global knowledge economy - and  the RDTI is the most significant program available to Australian companies to incentivise innovation. 

The changes to how the RDTI scheme applies to companies with annual turnover under $20 million would lead to a “significant decrease in refundable R&D offsets for Australian startups”, Canva chief financial officer Damien Singh said in a submission.

The Government should look to  increase support for R&D “with reference to the higher tax incentives available in other OECD countries”, the tech companies said.

“Small-medium enterprises will require additional financial support due to COVID-19 and losing access to previously budgeted refundable R&D tax offsets will further reduce their ability to invest in needed innovation within Australia,” he said.

“We see research and development as fundamental to furthering Australian innovation and to growing the Australian economy, especially post-COVID. In this continually evolving COVID crisis, the incentive is more important than ever to the recovery of the Australian economy.”

The Senate Committee is due to hand down its report on the RDTI changes on Monday, after several delays due to the COVID-19 pandemic.

22-year-old Adam Stone launches Speedlancer - raiding $500k

Adam Stone (22) launches Speedlancer - a freelancing platform after raising $500k plus from  Macdoch Ventures, which has previously invested in design tech firm Canva

The goal is to make  outsourcing effective for start-ups and small businesses who don't have access to a HR manager or the time to go through and recruit the talent that they need.

Looks like a savvy investment - as distributed and outsourced teams are the go 

https://www.smh.com.au/business/small-business/fast-and-young-22yearold-adam-stone-launching-freelancing-platform-20161223-gth54z.html

Diversity and a inclusion on the VC Industry to “hit the spot”

VC firms - a predominantly white male dominated industry is being disrupted - in a positive way!

 Diversity and Inclusion is hitting the spot!

Blackbird Venture have appointed Samantha Wong, 36, and Nick Crocker, 36, to equal partners  and  Airtree Ventures appointed Jackie Vullinghs, 31, as principal.

Ms Vullinghs said the new generation at venture capital firms will inevitably change the way funds invested. 

Elicia McDonald, 31, who was made a principal at Airtree last year, said greater diversity would strengthen venture capital and by extension the startup sector Australia.

"It's not just a gender thing but having diversity of opinions across investments leads to better outcomes," she said. 

Blackbird partner Ms Wong said the sector was changing and likened working in venture capital to an apprenticeship, where working directly with founding partners Rick Baker and Niki Scevak allowed her to learn the craft of venture capital.

Ms Wong said there is much to be done  to ensure opportunity is available to those  that did not found a successful company or go to Stanford when Google and Facebook started, and disadvantages migrants and women who may not have accumulated a lot of wealth.

“We need to look at diversity through not just gender but also a socio- economic background and race as well. We are just at the start of this."

Out of Tumultuous times come Opportunity

In tumultuous times like these, innovation flourishes - people having a chance to do things differently  resulting in some of the biggest disruptive opportunities arising. 

Case in point - Uber, Airbnb and WhatsApp were all founded during the 2009 global financial crisis,

What opportunities will this Pandemic create ?

The current state of play

• Stocks that are not  good for the planet - seem to have had their day and the global investment landscape seems to be changing.
• We are facing the largest intergenerational transfer of wealth in modern history - and this group is demanding the opportunity to support companies that fund a  sustainable future.
• Investors are look long to invest at in Companies that are aligned with their values..... and are set on making Ethical Investments  
• In the midst of the global pandemic, the Australian venture capital sector actually grew - reaching a record high of $US944.7 million ($1,314 billion) in H1 2020. (The KPMG Venture Pulse Q1 2020 report) 

Tony Surtees shared with us at the BBG innovation forum last month the insight that the Startup and VC space has become an extremely viable asset class - no longer just for VCs and angel investors.

Changes to Australian legislation in 2017 has seen the creation of investment opportunities for retail investors that were previously only available to high-net-worth individuals or sophisticated investors.

If they meet the criteria, these investors are able to invest up to $10,000 in private companies launching fundraises of up to $5 million;

Investors have generally been motivated by two things: 

• the opportunity to back the companies changing the world - that will be good for the planet 
• A great ROI

Startups and Enterprise will need to prove their social and environmental credentials as well as their ability to disrupt and grow. When they do that - says Steven Maarbani - investors will follow! 

Sources:- 

https://www.linkedin.com/posts/ivankayebsi_vc-investment-is-becoming-a-serious-asset-activity-6697116865904418816-Ud6V

https://bsivc.blogspot.com/2020/08/vc-investment-is-becoming-serious-asset.html?m=1

https://www.smartcompany.com.au/startupsmart/analysis/conscious-investors-post-covid-19/

http://bbg2020.blogspot.com/2020/07/the-great-reset-post-covid.html?m=0

The wine industry is being disrupted during this crisis - could be a good thing

Digital Wine Ventures (ASX:DW8) CEO Dean Taylor (named one of the 50 Stars of Wine and TOP 50 People in Ecommerce) expects to raise up to A$6.15m to disrupt Australia’s $5.3 billion wholesale liquor market which is currently serviced via distributors who charge on average between 35 and 50% of the wholesale price. 

The current Disruption to markets seems to be an ideal time launch the Direct-to-Trade Marketplace and expansion of its Smart Logistics Solution.

This Marketplace will allow restaurants, hotels, bars and bottle shops to support wine producers by purchasing directly from them via a farm-to-table inspired ordering solution.

The Marketplace is a simple, cost-effective and highly scalable platform to reach and transact with thousands of trade buyers.

Wineries can easily pivot to online sales during cellar-door closures, with wineries coming onboard  including Henschke, Jim Barry (James Halliday’s Winery of the Year 2020), Brokenwood, Josef Chromy, Peter Lehmann, Primo Estate, Delatite Wines, Mollydooker and Casella Family Brands.

The volume of cases processed through the cloud-based platform over the last three months doubled as Australians took advantage of online ordering to purchase from their favourite wineries as an alternative to visiting retail outlets and shopping centres.

Triller becomes a unicorn

Triller, the developer of a short-form video-sharing app, is in the midst of raising a $250 million funding round that could value the startup at $1.25 billion, according to reports. The Los Angeles-based TikTok rival has reportedly raised more than $30 million in venture capital funding over the five years since it launched.

Triller has made strides as its larger peers continue to undergo growing pains. Microsoft is in talks to acquire a large slice of TikTok amid a political firestorm. Instagram launched Reels this week—its answer to TikTok—after Facebook CEO Mark Zuckerberg faced a recent congressional grilling over whether his company's habit of acquiring and imitating rivals was anticompetitive.

Meanwhile, Triller's popularity surged over the weekend, briefly making it the number one app in the world. The company also named TikTok star Josh Richards as its chief strategy officer, and sued TikTok for patent infringement. Triller has worked to set itself apart through partnerships with major music studios and an investor roster that includes artists like Kendrick Lamar, The Weeknd and Snoop Dogg.

VC Investment is becoming a serious Asset Class

Although Australia is in its first recession in 29 years, the startup investment scene remains active - with 3 new funds coming to the market focussed on Australia and New Zealand-founded startups .

The Australian Venture Capital Industry is coming into its own as an asset class - says Tony Surtees (Co-founder of Zeetings which was recently sold to Canva) at our BBG Innovation  Forum.

Amanda Price KPMG - head of High Growth Ventures - points out that Startup investment in Australia hit new highs over the first six months of 2020,  with 92 deals reaching US$944.7 million, up from US$627.3 compared to first six months of 2019 according to KPMG’s Venture Pulse report (circa 1% of global activity) See full Article  https://home.kpmg/au/en/home/media/press-releases/2020/07/australian-startup-investment-continues-rise-2020-despite-covid19-28-july.html - the article goes on to give details of Global VC Investment .

The standout Aussie Startup has been Atlassian Inc., which was founded in Australia about 19 years ago with less than $50k is now a $43 billion public company.

Aussie Funds loading up - getting ready to invest 

Square Peg cofounded by Justin Liberman and Andrew Bassat raised a A$350 million round in June (topping $1b with pension backing) 

Blackbird - cofounded by Niki Scevak, and Atlassian’s Mike Cannon-Brookes has  just raised  $500m  which now has  A$1.3 billion in total committed capital 

and 

Our Investment fund is  just finalising the  raise of its 2nd fund of 75m (see   https://bsivc.blogspot.com/2020/08/a-fresh-75m-for-australian-vc-our.html) for details of  what this amazing group of humans are doing ( Lawrence, Bella, Jeff,Dave and Jeremy )

Blackbird and Square Peg’s home run is its investment in Canva  of about $110 million part of capital rounds together  with with existing backers including Sequoia China , General Catalyst Partners, Square Peg , Felicis Ventures and Bond.

Canva now Has a $6 billion valuation in a funding round in June. 

Blackbird also invested in autonomous vehicle startup Zoox Inc., which sold in June to Amazon.com Inc. for more than $1 billion. 

All 3 like the edtech space - and together with Microsoft, Seek, Amazon and others have just backed GO1 in a $62m series C investment.

Edtech seems a hot space!!!! - it’s the #nexttechrevolution

A fresh $75m for Australian VC “Our Innovation Fund”

Lawrence Schwartz and Isabella Rich - supported by Jerry Stesel, Geoff Levy and David Shein plans to close its 2nd  fund ($75m) after having invested in 12 Australian Companies with its first $50 fund - (who has raised a further $250m from other funds) .

Isabella said that they have five deals at the pointy end of due diligence that they are very excited about. 

Remote work, remote operations and making businesses more efficient seems to be the flavour of deal flow in this Covid-19 environment.

Three of the notable Companies they have backed are 

Go1 - a workplace training marketplace - "The OIF team have been incredibly helpful – particularly with our US expansion where we’ve seen 5x growth over the last 12 months" 

Kasada - a cyber security company backed  by Malcolm Turnbull 

Advanced Navigation.an artificial intelligence powered navigation and robotics business

Assignar - a construction operations software business Sean McCreanor, said the OIF Team have been pragmatic and empathetic towards its portfolio companies and their customers.

This team is clearly not scared to get their hands dirty and does what it takes to help their portfolio companies succeed .....  they see themselves as an extension of the businesses we invest in.

David Shein shared an amazing 3 hours with the BBG Innovation forum - and shared a secret to the funds success -  its 3F values

• founders (supporting them), 
• fund (generating returns for stakeholders) and 
• fun 

The team  relies strongly on personal referrals - says David - and it was rare that an investment would be made from a cold call! 

The value they bring is so much more than the money they provide !

The CEO of GO1 who raised on the $62m raise said “The OIF networks are strong for both prospective partners and customers. For example, they helped organise an introduction to Walmart."

Laurence Schwartz said the fund  was tracking at a compounded annual rate of return of 32.7 per cent after tax, which would put it in the top quartile of global funds like Accel and Lightspeed.

Will the Government Change R&D Tax Incentive scheme to support Innovation in Tech?

Article inspired by Author Denham Sadler from 

Innovation Aus

Hopefully there will be significant changes to the R&D definition to support innovation and Tech in Australia ! 

The R&D Tax Incentive (RDTI) is an amazing programme that has helped so many corporates grow through innovation, experimentation and giving them the opportunity to build on the edge - knowing that it is ok to fail - as the Government will partially support this risk - It has the back of the innovators. 

Sean Harris form BSI Innovation share with us what the The R&D Tax Incentive is 

If you have tax losses - you can get back in cash up to  43.5 cents in the dollar of your R&D spend - says 

If you are in a tax paying situation - you can get an after tax benefit of 16 cents in the dollar for every R&D dollar spent. 

Current Legislation definition is stifling Innovation 

Legislation and bureaucracy is potentially jeopardising this brilliant programme - a beacon that other countries have used based on Australia’s success - and is  risking a growing number of businesses, stopping to using the program and not innovating in Australia.

Software claims under the research and development tax incentive (RDTI) have become increasingly contentious in recent years, with several companies noting changing interpretations of definitions in the laws and damaging audits conducted by the Australian Taxation Office.

There are also concerns that planned changes to the scheme, amounting to a $1.8 billion cut, could further hurt companies looking to conduct R&D in Australia. A Senate committee inquiring into this legislation is set to report back by the end of the week.

We are investing 100’s of billions in supporting me too businesses - surely the focus should be there to support the innovators that are prepared to take risks?

Case in Point Evado 

The RDTI is often too risky and difficult for many companies to access, according to Evado chief technologist Ross Anderson.

Evado is a Melbourne-based tech company that sells software for clinical trials to life science companies, universities and government organisations. The company currently has two Australian patents and one US patent for software architecture and had previously accessed the R&D tax incentive for its research work on new software architectures and information technologies.

But the company stopped accessing the RDTI in recent years after deciding it was too risky and onerous. This has led to some job losses and Evado losing some of its competitive edge, Mr Anderson said.

“We don’t do as much R&D now. We have to use internal resources, and where before it gave us funding to bring on technical matter experts and people from universities to help do some research, now that’s gone by the wayside,” Mr Anderson told InnovationAus.

 “Our ability to remain cutting-edge and to engage with universities, we’ve basically had to drop that.”

“Over the last three years we have been losing our competitive edge because we can’t afford to take government money to assist in maintaining that competitive edge because the downside risk of it is just too big,”

The Government should be supporting Software Development and Innovation - and I believe they want to!! 

Software technology has terrific upside benefits for companies and the country. 

The Issue is with the definition of R&D

The issue lies in the definition of research included in the RDTI legislation, which is based on the Frascati Manual, and the dangers of an audit conducted by tax officials with little knowledge of technology.

Interpretations of the laws meant that any R&D being conducted had to be globally unique, putting many companies in a difficult position.

Effectively the test became stricter – it has to be globally unique. If it’s not - the ATO  can claw back anything from up to three years previously 

This could put the company out of business. 

The Spirit of R&D

“Because so much is happening in so many places simultaneously, the demonstration of something that is unique should be acceptable for it to be unique within the business. It is doing something which is producing a new product or service, preferably something that demonstrates that this research is going to improve the competitive edge of the business,” Mr Anderson said.

A number of other high-profile companies have also raised concerns with the current RDTI scheme and the proposed changes. 

MedTech giant ResMed recently told the senate committee that the prospective changes would act as a “disincentive for investment in Australia”, and the company may be forced to consider other countries for further R&D

The government has recently flagged its intention to consider removing all references to the Frascati Manual in defining what an eligible software claim is in order to “avoid confusion”.

Denham Sadler from Ausinnovation suggests that AusIndustry should be tasked make the decision of whether it should or shouldn’t be in, not the ATO, who might know the tax laws but nothing about R&D.

Mick Lynch of BSI Innovation believes that  there should be case law of what R&D is based on eligible claims over the past 30 years.

Mick’s advice to Companies who believe they are innovating and doing R&D 

“If you believe that you are Innovating and  producing a new product or service, preferably something that demonstrates that this research is going to improve the competitive edge of the business - 

Make sure you record details of the project, the time of all people spending time on the project - and ensure you have contemporaneous records of your activity.”

Link to Article 

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